Second leg of Siberian oil pipeline may be delayed

The second stage of the East Siberian – Pacific Ocean Pipeline may be postponed by 3 to 4 years. According to the Ministry of Natural Resources the possible delay is due to, quote, “a  failure to meet oil production targets”.

There are two stages of the ESPO pipeline development. The first one is already underway and is due to be completed by August next year.

It will carry oil from Tayshet in Western Siberia to Skovorodino on the Chinese border, to supply the fast-growing Chinese market.

But stage 2 will carry take oil from Skovorodino to Russia's Pacific coast, and talk of delays doesn’t surprise analysts.

“From the very start there were doubts about the second leg of the pipeline  – is there economic reason for its construction. Because, it is much more expensive and there is an option to take the crude oil to the Pacific by rail. Most of the crude will go to China from the first leg, and more likely there will be an extension going to China then trying to take more crude to the Pacific Ocean,” believes Nadezhda Kazakova, Senior analyst, MDM BANK, Moscow.